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NSE Intra-day chart (09 January 2020)
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Market Commentary 10 January 2020
Markets to get a cautious start ahead of IIP data

 

Indian equity markets came back in strong rally mood on Thursday, with Sensex & Nifty ending higher by around 1.55% each. The start of the day was on strong note, aided with industry body FICCI's statement that the government should infuse capital in the economy without worrying about the fiscal deficit target as the GDP growth is estimated to slip to 11-year low of 5% during 2019-20. Adding some relief, SBI Chairman Rajnish Kumar said that banking sector is going to see good recoveries from non-performing assets in the third & fourth quarters of current fiscal, helped by resolution of some large stressed accounts. Key bourses maintained their gaining momentum in the second half of the trading session, on the back of firm cues from the global markets. Investors were seen taking a note of credit rating agency, India Ratings and Research's (Ind-Ra) report that India will have to raise its labour productivity growth to 6.3 per cent to achieve 8 per cent GDP growth. The labour productivity growth in FY19 was 5.2 per cent. The street paid no heed towards the World Bank's latest report stating that growth in India is projected to decelerate to 5% in financial year (FY) 2019/20, which ends March 31, amid enduring financial sector issues. Finally, the BSE Sensex gained 634.61 points or 1.55% to 41,452.35, while the CNX Nifty was up by 190.55 points or 1.58% to 12,215.90.

 

Magnifying their previous session's rally, the US markets ended higher with gains of over half percent on Thursday  as investors focused on progress on the trade pact with China due to be signed next week and amid an easing of concerns about war in the Middle East. China's top trade negotiator, Vice Premier Liu He, will lead a delegation to Washington next week to sign a phase-one trade deal.  Trade negotiations have been a driver for market moves for more than a year because President Trump's imposition of import tariffs has slowed global economic growth. The progress on China trade talks has helped, at least momentarily, to put the threat of conflict between the Washington and Tehran on the back burner after the Islamic Republic late Tuesday launched a missile strike on US military bases in Iraq in retaliation for the killing of one of its top generals last week. All three benchmarks set new intraday and closing highs, with the Dow nearing the psychologically important 29,000 threshold. On the economic data front, with the more closely watched monthly jobs report looming, the Labor Department released a report showing first-time claims for US unemployment benefits fell by more than expected in the week ended January 4. The report said initial jobless claims dropped to 214,000, a decrease of 9,000 from the previous week's revised level of 223,000. Street had expected jobless claims to edge down to 220,000 from the 222,000 originally reported for the previous week. The Labor Department said the four-week moving average also slid to 224,000, a decrease of 9,500 from the previous week's revised average of 233,500. The less volatile four-week moving average pulled back after hitting its highest level since January of 2018 in the previous week.

 

Crude oil futures ended marginally lower on Thursday as traders digested data that revealed a big jump in crude stockpiles in the US, and as Mideast tensions saw some apparent easing. Meanwhile, reports emerged that two US officials said it was highly likely that an Iranian anti-aircraft missile downed a Ukrainian jetliner Tuesday, possibly by mistake, killing all aboard. Still, the momentary calm in Mideast anxieties, which could have disrupted crude production in the oil-rich region, has anchored prices. Crude oil futures for February declined by 5 cents or less than 0.1 percent to settle at $59.56 a barrel on the New York Mercantile Exchange. March Brent fell 7 cents or 0.1 percent to settle at $65.37 a barrel on London's Intercontinental Exchange.

 

Extending its gaining streak for a third straight day, Indian rupee ended significantly higher against dollar on Thursday, on persistent selling of the American currency by exporters. Sentiments were buoyed with industry body FICCI's statement that the government should infuse capital in the economy without worrying about the fiscal deficit target as the GDP growth is estimated to slip to 11-year low of 5% during 2019-20. A spectacular relief rally in local equities coupled with softening crude oil prices also supported the forex sentiment. Traders paid no heed towards the World Bank's latest report stating that growth in India is projected to decelerate to 5% in financial year (FY) 2019/20, which ends March 31, amid enduring financial sector issues. On the global front, US dollar rose on Thursday, as investors' fears over escalating US-Iran tensions eased following US President Donald Trump's remarks on an Iran attack.  Finally, the rupee ended at 71.21, 49 paise stronger from its previous close of 71.70 on Wednesday.

 

The FIIs as per Thursday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 3974.18 crore against gross selling of Rs 4318.93 crore, while in the debt segment, the gross purchase was of Rs 1005.36 crore with gross sales of Rs 940.24 crore. Besides, in the hybrid segment, the gross buying was of Rs 100.00 crore against gross selling of Rs 427.71 crore.

 

The US markets ended higher on Thursday as tensions between Iran and the US eased for the time being, with tech shares outperforming. Asian markets are trading mostly in green on Friday following the easing of US-Iran tensions, and after US stocks shot to new highs overnight. Indian markets ended higher with gains over one and half a percent each on Thursday as investors remained optimistic amid temporary de-escalation of a heated rhetoric between the US and Iran. Today, the markets are likely to get a cautious start ahead of industrial growth data for the month of November to be out later in the day. Also, traders will be looking for the third quarter results with Infosys is scheduled to announce its December quarter numbers later in the day. The IT service provider is expected to post revenue growth of 0.9% to 2.1% on a sequential basis for the quarter ended December 31, mainly on account of the company's cross-currency gains and business transfer of Eishtec in Ireland. There will be some cautiousness with a private report indicating that increase in vegetable prices has probably pushed retail inflation to its highest in over five years in December, far more than the Reserve Bank of India's medium-term target of 4% for a third straight month. Traders will be concerned with report that amid a slowdown in economic activity, state-owned Sidbi said credit supply growth to the commercial sector has slowed to a multi-year low of 8.1 per cent for the 12 months ended September 2019. However, some support may come later in the day with Prime Minister Narendra Modi's statement that fundamentals of the Indian economy are strong and it has the capacity to bounce back. There will be some buzz in the aviation stocks with the International Air Transport Association's (IATA) data showing that reaching double digits for the first time since January 2019, domestic passenger traffic growth in India jumped to 11.3% in November as compared to the corresponding month of 2018. Telecom stocks will be in focus with industry body PHDCCI's statement that auction of 5G spectrum should be taken up after 2-3 years, which will help the government get proper valuations of the 5G airwaves. There will be some reaction in fast moving consumer goods (FMCG) stocks with report that despite some definite signs of improvement in economy in the near future, CARE Ratings does not expect much improvement in Indian FMCG sector until Q3 FY21.

 

Support and Resistance: NSE (Nifty) and BSE (Sensex)

 

Index

Previous close

Support

Resistance

NSE Nifty

12,215.90

12,157.62

12,249.12

BSE Sensex

41,452.35

41,258.01

41,564.41

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,520.26

47.30

46.23

48.43

Tata Motors

408.03

192.00

186.58

195.08

SBI

403.48

330.20

326.33

332.73

ICICI Bank

189.34

546.30

535.27

552.37

Bharti Airtel

178.46

460.10

451.95

471.60

 

  • Bharti Airtel has opened QIP process to raise $2 billion and has launched FCCBs worth up to $1 billion. 
  • TCS has expanded its partnership with Vipps AS to leverage TCS' Machine First Delivery Model and cloud services to accelerate the latter's growth and digital journey. 
  • Bajaj Auto is going to launch the Chetak electric scooter in India on January 14. 
  • NTPC is in talks with Government of Rajasthan to sign a MoU for developing a 925 MW solar park in Jaisalmer.
News Analysis